Chinese currency RMB will become more important for Australia’s economy: ACBC chief

The Chinese currency RMB will become even more important for Australia’s economy, and even the world, over the next three years as China’s central bank continues its internationalization, the chief of the Australia China Business Council (ACBC) said on Friday.

Australia’s economy is continuing a mirroring economic transition, away from mining and industrial-led growth, to services industries tailored to capitalize on the Asian middle class.

Within the next 10 years, it’s expected trade links with growth even further with China expected to represent up to 47 percent of Australia’s healthcare exports, 41 percent of educational exports, 35 percent of Australia’s tourism and 19 percent of financial services exports.

“Other countries of course can tell a similar story to Australia, and all that means is the RMB will become even more important to Australia and the world,” ACBC National Chairman John Brumby told a launch of Commonwealth Bank of Australia’s (CBA) RMB Demystified report.

China’s currency has undergone a journey nearly alongside the nation’s economy over the last four decades from solely internal use, to opening up and becoming the fourth most used payments currency globally in 2015 and eventual acceptance into the IMF’s special drawing rights basket, Brumby said.

“This is part of this continuing story of China, continuing shift of economic power, the geopolitical transformation that we’re seeing around the world.”

Australia is at a strategic gateway for the continued internationalization of the RMB, holding the southern hemisphere’s first yuan clearing house and the ability to hold local equities in the Chinese currency.

The landmark China-Australia Free Trade Agreement (ChAFTA) also gives Australian businesses a framework to capitalize on the opportunities of China’s consumer economy using RMB-enabled architecture.

“By helping more Australian companies build strong bridges with Chinese counterparts, using the RMB and (ChAFTA) as the essential building blocks, together we can deliver enormous economic dividends for both of our nations,” CBA Institutional Banking and Markets group executive Kelly Bayer Rosmarin said.